Media buyers on guard as newspaper sales deteriorate

Media buyers and analysts have reacted with concern but little surprise to the latest Audit Bureau of Circulation (ABC) figures that show newspaper and magazine sales in Australia continue to plummet.

The universal opinion is that an accelerated decline in circulations, led by Fairfax, was expected but nonetheless very worrying for the industry.

"This is not a good audit, but pretty much expected,” said Steve Allen, managing director at Fusion Strategy, who added no title is immune from the almost across the board declines.

Allen described the figures as approximately three points worse off those in the December quarter and the poorest since the mergers and closures of the early 1980s, while he hailed the outstanding performance of the Australian Financial Review Weekend edition, which spiked by over 18% on last year.

"The length of three plus years of really poor retail growth is accelerating a dire outlook for newspapers, from which they will not recover,” said Allen.

Sharb Farjami (pictured), COO at Mindshare Australasia, suggested the results are not quite as dismal as they first appear, due to people understanding that newspapers are going through a period of long term structural change.

“There is a long term consumer shift towards a more multifaceted consumption of news and until this stabilises the larger newspapers will continue to lose audience,” said Farjami.

“This, in and of itself, should not be a concern for media buyers as long as it is factored into their planning and their pricing. It is only when changes exceed expectations that it becomes a problem for media buyers. A good example of this is with the move to compact.”

Farjami added that anyone who was expecting this to lead to long term readership and circulation growth was “deluding themselves” and there is “no magic bullet” solution. He believes this was not Fairfax’s goal; rather it was an exercise in cost reduction in order to create a sustainable business model going forward with a secondary benefit of maybe retaining some readers.

Although Fairfax has yet to comment, News boss Kim Williams today defended ABC results, describing them as encouraging, stating they provide confirmation that consumers will pay for quality journalism on digital platforms.

“Consumers are willing to pay for quality journalism on digital platforms, so long as it suits their needs and lifestyles,” said Williams.

Ivo Kavelj, MediaCom’s head of implementation planning & investment, said publishers seem to be pinning their hopes that digital subscriptions will continue to rise.

“It looks like publishers are banking on digital uptake improving at some point in the future as people get used to different models being put out to market,” said Kavelj, who added that it will be interesting to see if Fairfax follows a similar route to News Limited’s new offering news+.

“They might sit and wait to see how news+ performs; there is a lot of speculation about what will happen."

Kavelj said newspapers will still get large audiences, but that we’re likely to see more and more push to digital, “to help ensure mastheads remain relevant”.

Maree Cullum, trading director of PHD Melbourne, agrees that were only going to see an increased migration to digital.

“We’ll wait to see the next set of figures which will incorporate the change to compact to see if this decline can be halted,” said Cullum. “But looking at the latest figures, the decline is continuing, with the numbers showing it is migrating to other areas. Publishers still have to introduce their paywalls as well, so we could see further declines across online once they’re introduced.

Nathan Cook, Maxus national trading director, called the deep dive in circulation a concern, but that the ABC Data did not show any abnormalities to the trends forecasted prior to its release.

"Given the fact we’re seeing a greater diversity of clients engaging with their iPad app, such as the Sydney Morning Herald, it has worked quite well.” He agreed that the real challenge will start when the paywalls goes up. "The key will be trying to monetise those sites, because audiences will decrease, so they will have to try to strike that balance."

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